Category: Apple

Last week, Apple released its Q1 FY2017 earnings and announced its highest quarterly revenue yet as well as all-time revenue records for iPhone, Services, Macs and Apple Watch. During the quarter, Apple sold 78.3 million iPhones prompting, once again, a discussion on Apple’s strong dependency on the iPhone. While this comment is fair and one Apple is well aware of, the comments that Apple has failed to bring to market another product with the same broad appeal of iPhone, commanding the same premium, is less so. It is less fair, not because it is not true but because such commentary fails to account for the fact no other single device is likely to have the impact smartphones have had on technology and, more broadly, on our lives.

Another common argument shared by some Apple critics is that the inability to deliver a killer product rests solely with Tim Cook. When we consider the two new lines of products Apple brought to market under Cook — Apple Watch and AirPods — I struggle to see how people could honestly believe Cook is failing.

Apple Watch and AirPods are very different products that have a lot to offer Apple as a brand, both as standalone products but, even more so, when they come together.

Apple Watch Gives Back What You Put In

I have been wearing an Apple Watch every day since it first came out. Yet, whenever people ask me if I love it, I hesitate to say I do because it is hard to explain why. Apple Watch gives back what you put in. You need to invest some time in setting up your preferences when it comes to notifications, pick your apps, buy into fitness, and add your credit cards. Most importantly, you need to trust Apple Watch to pick up some of the responsibility you have given to your iPhone for so long. When you do so, Apple Watch becomes a trusted companion you will not easily go without.

The problem Apple Watch is facing is that it did not reinvent the smartwatch category — it improved it. And, as consumers remain unclear on what role smartwatches play, it is hard for many to understand the value Apple Watch could bring to their connected life. In a recent study we ran at Creative Strategies, we asked US consumers if there was a tech product they purchased or received as a gift they liked more than they thought they would. When we looked at what device Apple Watch owners mentioned, if any, we found 53% said Apple Watch, proving there is certainly a return on investment in the product. Across all early tech consumers, however, only 9% mentioned Apple Watch as the device they liked more than they thought.

Over the past few months, with the arrival of Apple Watch Series 2 and watchOS 3, we have heard Apple compare Apple Watch’s performance to the watch industry and not just because it makes the numbers look better. Apple understands the real magic is what mainstream consumers find in Apple Watch as an upgrade from a traditional watch rather than what early tech adopters might find in comparing Apple Watch to previously owned wearables as the above data suggest. Data aside, if we consider how Apple is dominating the smartwatch market and how competitors are moving more and more to make their smartwatches look like a traditional watch, it seems natural to use that market as a measure of comparison. As John Gruber said: it is time to consider Apple Watch as a watch.

Apple AirPods, Practically Magic!

This is the slogan of Apple’s AirPod commercial and, if you ask anyone who has tried them, they will agree. The feeling of magic is not because the user is aware of Apple’s unique approach of having two separate streams of music play simultaneously into each AirPod. The magic is delivered as soon as you pair your AirPods by simply taking away any pain previously inflicted by Bluetooth-enabled headphones requiring you to pay attention to flashing colored lights while pressing odd buttons. The initial ease of use carries over into everything you do as you let Siri work its way into your ears.

In the study mentioned earlier, among the early tech adopters who said there was a product they liked more than they thought, 38% mentioned Apple AirPods. This number is even more telling when you consider they refer to early tech buyers where most of the purchases (91%) are occurring today.

While overall performance is great, I do strongly believe most users are buying first and foremost into the magic and will strongly recommend AirPods based on their visceral experience. The AirPods magic is also what has prompted some commentators to say Apple got its groove back and AirPods are the kind of product Steve Jobs would have done. So does magic sell more?

Magic Might Be Short-lived, Usefulness Rarely Is

No, magic does not necessarily sell more products but it makes it easier to sell. Instant magic will make for a product that sells itself but such products might have to be conceptually simpler in the experience it delivers in order for the magic to work. You know how to use headphones. There is very little you need to learn in order to appreciate AirPods and what is appreciated is common across the user base. This helps tremendously with user promotion, something consumers look for more and more when researching what products to buy. Other products, like Apple Watch, are more complex in the value they deliver because users will appreciate different features. What I might see as magic, someone else might not. This makes for a more complex sales process in the store as well as in the marketing message. Yet, the engagement the user will have with the product will not be in any way less meaningful. A way around this complexity could be to focus on a feature with broad appeal and turn that into magic. Apple is currently doing exactly quite successfully with the “depth effect” on iPhone 7. Most iPhone users use it as their main camera and get a visceral gratification from the depth effect.

What is particularly fascinating about Apple Watch and AirPods is that using them together allows them to feed off of each other’s strength to deliver a whole new kind of magic. I strongly believe more and more of Apple’s future success will be built on the magic of devices working together at home, at work or in the car.

I recently found myself in a conversation with some friends (thanks again to Dan M. (@OhMDee), @zcichy, and Eric (@mobile_reach) I made on Twitter (yes, you can make friends on Twitter). Our conversation was a frequently productive and sometimes frustrating back and forth on Apple’s privacy position and what risks it may have on their future competitiveness with services, namely AI/Siri.

While Apple is not going to be a pure play services company, there is no doubt services will play a much larger role in consumer experience in the coming years. It is reasonable to believe one’s ability to compete in features around machine learning and, eventually AI, will depend on the depth and quality of data acquired to train your networks and AI assistants. So let’s start by looking at Apple’s relationship with customer behavior data.

Is Apple Getting Enough Useful Data?
Apple’s relationship with customer data has always been clear. If you agree to share analytics/diagnostic information with Apple, you are opting-in to share some data with Apple. They are upfront about what this data is used for as they state very clearly they are collecting data on user behavior which will be used to help make products and services better in the future. Pointedly, a key difference here, as opposed to many other services, is even if you opt out of sharing data, you still get to use the full features of the service. With their advancement in tactics around privacy, including differential privacy, they are purposefully anonymizing that data so any information collected — things you say to Siri, what apps you install, what news you read in Apple News, etc. — can never be tied back to the individual. The technical term for this is Personally Identifiable Information. Apple’s goal is to make it so no information collected can ever be tied to personally identifiable information. While no one will dispute Apple’s attempts to go above and beyond to protect our privacy is admirable, there are a few concerning points I’d like to call out.

First, we have acknowledged Apple is using information about us to make their products and services better. But we simply have no idea how much information is being collected or analyzed. The rub is Apple’s services are progressing (or, at least, feel like it quite often) at a rate much slower than other companies who do collect and analyze more customer behavior data like Google, Facebook, and Amazon. There is no doubt Siri still has advantages in global language support and integration across all of Apple devices while the competition still has limitations. While Siri is certainly competitive with Google Assistant and Amazon’s Alexa (none of them are perfect yet or without faults) you have to admit both are pretty advanced and comparable to Siri in many ways. Both Google’s Assistant and Amazon’s Alexa have been on the market less than a year while Siri has been on the market in five years. Despite technical advancements in machine learning and natural language processing during that four year gap that benefited Amazon and Google, there is no doubt in my mind their massive data sets on behavior was useful in feeding their backend engine to reach near parity with Siri from a machine intelligence standpoint.

Look at my brief time on Android using Google Now compared to Apple’s Proactive and now Siri apps. Both are supposed to be learning about me and making intelligent and contextual recommendations that sometimes work but more often than not, don’t. I’ve been on iOS since 2007 yet, a few months on Android yielded better contextual and relevant recommendations on a more consistent basis than both Proactive and Siri. This observation leads me to believe competing services are learning and getting better, faster by using more of my behavior data to analyze than Apple. The only thing I can think of is it’s because of Apple’s desire to have a hands off approach to my data.

All of the above points lead me to my final observation. I believe it is essential that Apple is competitive with services like Siri, and many others, against those whose business models depend on more on data collection than Apple’s. While I don’t believe Google and Facebook are the bad actors Apple portrays them as (and neither do consumers via evidence from our surveys), the bottom line is their business model, the financial lifeblood of their company, depends on their ability to sell advertising with the data they collect on customers using their service. Where Apple’s business model does not depend on using customer data collection to sell advertising, it is necessary for their model to make products and services that delight their customers. Within this viewpoint, Apple is already a trusted entity with our privacy since their business model does not necessitate mining that personal information. Based on some recent research we did, Apple customers overwhelmingly listed Apple as the top company they trusted with their privacy over companies like Microsoft, Google, Amazon, Samsung, Facebook, etc.

However, getting useful and good behavioral data is essential for Apple to make better products and services and, more importantly, compete with those services down the road. I’d almost prefer that, instead of Apple’s stance being not only to collect as little data as necessary and also to universally anonymize that data, they would simply say, “Trust us with your data. We will keep it safe and secure and we will deliver you superior products and services because of it.” I could also be satisfied with a hybrid approach where, for the most security conscious customers, Apple gives them the option to keep the existing privacy protocol as well as their differential privacy techniques, but also allow others to opt-in to giving them more data so that things like Siri, News, Apple Music, etc., benefit from that data and thus, deliver those customers a much more personalized and useful service. With some of the recent changes in iOS 10.3, I feel they are getting closer to exactly this scenario.

My genuine concern with Apple solely relying on an “above and beyond” approach to consumer privacy is we don’t know yet if this process will work and the existing evidence causes a great amount of speculation. My concern is they are mortgaging their future competitiveness around things like AI and better services holistically with this stance. Thus I view it as somewhat risky even if it seems like the right thing to do. If their approach does not work and their services truly not compete, some of their customers may use solutions from competitors whose business models open the door for them to be irresponsible with our data. If that happens, the customers lose because Apple — and I include Microsoft in this statement — have the least motivation to be irresponsible with our privacy. Their business models do not depend on directly monetizing that data. Say Google becomes the AI agent of the future and, all of a sudden, they fall on hard times and the only way to right the ship is to compromise or alter their privacy stance to keep making money. While it is only a hypothetical, it is still a valid concern if a free service monetized by ads becomes the majority services monopoly in the future.

I truly hope Apple is continuing to take a hard look at how their services compete in the market against comparable ones. Should there need to be some pivots on how data is collected and used to compete, I think the market would be OK with that. They are no doubt doing the right thing for their customers but, if going above and beyond with differential privacy yields non-competitive and thus less relevant services, then it will be all for nothing if their services aren’t used and can’t protect their customers.

Being involved in the design and development of consumer products, I’ve seen how a single design decision can have huge unintended consequences and change an entire industry — for the better or the worse.

As a positive example, when Apple decided to design notebooks using aluminum housings and abandon the industry’s use of plastic with ugly vents and screws, they created a huge industry of automated machining of solid aluminum blocks. That industry has now made it possible for other notebooks to use the same processes to create their own products.

Another example is when Apple decided that thinness was a major goal for its mobile products. The unintended consequences have had a huge impact, likely beyond the original intention, but one that’s impacted performance, features, user satisfaction, and the entire industry.

Some of those consequences are:

Shorter battery life – Making phones and notebooks as thin as possible and then making them even thinner in each subsequent generation resulted in less volume for batteries. But because the one dimension that reduces a battery’s capacity most is its thickness, battery life of iPhones and MacBooks have suffered. Battery life of iPhones and the latest line of MacBook Pros are well below expectations and are one of the major user complaints. So much so, the battery indicator no longer displays time left. And, since a battery’s life is based on the number of charging cycles, smaller batteries need more recharging cycles, resulting in a shorter life.

Fragility – The thinness of iPhones has resulted with the iPhone 6 and 6 Plus actually bending in normal use and the need for protective cases. Samsung has shown, with their Galaxy S7 Active, that a phone can be made with a rugged, waterproof enclosure that’s only a few millimeters thicker. Speaking of Samsung, there’s even speculation that their problem with the Note 7 phone catching on fire was a result of trying to beat Apple in the thinness competition.

Reduced number of ports – With thinness comes the need to remove many of the legacy ports designed for thicker products. While leaving them out makes it possible to reduce thickness, it requires carrying more dongles to connect to our other devices.

Loss of features – iPhones still don’t have NFC and wireless charging, likely a result of insufficient space. Magsafe, one of the most innovative features ever created for notebook computers, has been eliminated to make the new MacBook notebooks thinner. With its removal is the loss of the battery charging indicator.

Typing errors – Thinness has led to notebook keyboards with reduced performance compared to the iconic keyboards used in products like the ThinkPad. Key travel has gone from 3 mm to under 1 mm, causing more errors.

What’s ironic is these consequences might have just resulted from an Apple executive saying. “I want our products to be as thin as they can be”, walking away, and then everyone taking the person literally. How likely is it that, when that request was made, anyone was thinking of any adverse outcomes? Well, perhaps a few engineers that were told not to be negative and be a team player.

The lesson is that an arbitrary goal for a product’s requirement can have far-reaching effects on the company’s products, as well as an entire industry, and few may be aware of that when it all began.

There is a lot of speculation about the “iPhone 8” and what Apple should be focusing on in 2017 in order to stay ahead of the game or, for some, barely keep up with competition. Despite some safe bets on the new iPhone features that can be extrapolated from supply-chain clues, guessing, even correctly, what Apple will do is almost as unlikely as winning the lottery. I thought, however, that looking at the 2016 acquisitions would give us more than a clue as to where Apple will focus in the future and I share my wish list of what I would like to see come out of Cupertino.

What Apple Acquired in 2016 (that we know of)

Emotient is a startup that uses artificial-intelligence technology to decipher people’s emotions by analyzing their facial expressions. The technology can be used for a number of things including detecting pain, reading reactions to content or situations we are exposed to – think advertising and retail. Emotient had been granted a patent for a method of collecting and labeling as many as 100,000 facial images a day that can be used to teach computers to better recognize facial expressions.

LearnSprout is a San Francisco-based startup focusing on tools that help teachers monitor students’ attendance, grades, and other school activities through easier access to school information systems. One of the purposes of collecting such information and making it available to teachers was to help identify at-risk students.

Flyby Media is a company that worked with Google on Project Tango. Flyby Media developed technology that allows mobile phones to see and scan, through the camera, the world around them. The company’s website also said they were developing the next generation of consumer mobile-social applications that connect the physical and the digital worlds.

LegbaCore is a firmware security company that specializes in “digital voodoo” or security at the deepest and darkest levels of computer systems. Apple was first exposed to them as they were battling Thunderstrike 2, the first super-worm to successfully attack Macs.

Carpool Karaoke is a popular show Apple licensed 16 episodes of and is to be produced (but not hosted) by James Corden as well as Ben Winston, the “Late Late Show’ executive producer. Tim Cook and Corden kicked off Apple’s September event with a special edition of Carpool Karaoke.

Turi is a machine learning and artificial intelligence startup focused on tools that help enterprises make better sense of data. Turi also enables developers to build apps with machine learning and artificial intelligence capabilities that automatically scale and tune.

Gliimpse is a Silicon Valley-based company that built a personal health data platform that enables any American to collect, personalize, and share a picture of their health data. The focus was particularly around cancer and diabetes patients.

Tuplejump is an Indian-based machine learning company specializing in software that processes and analyzes big sets of data quickly.

Indoor.io is a Finnish company focusing on indoor location and mapping.

Acquisitions Show Clear Areas of Focus but How It Will Materialize is Still Unclear

If you look at the list above, aside from the clear outlier of Carpool Karaoke, the focus for Apple seems centered around artificial intelligence, augmented reality, enterprise and education.

Artificial intelligence is probably the best example of how different the expectations vs. what Apple delivers might be. For many, artificial intelligence simply boils down to how smart Siri is. However, intelligence in devices is expressed in many different ways. Learning which color emoji is your preference, learning your most likely route at a given time of the day, understanding a reference to a time and a place in an email and setting up an appointment for you are all examples of how “intelligence” can be used to make our experiences better.

Machine learning and fast data processing are key to feeding the brain of any artificial intelligence. Analyzing millions of data points to discover patterns that can help predictability is very important in lowering response times and increase accuracy in our exchanges with an assistant like Siri. Being able to detect users emotions might play a role in that interaction. For the assistant to know if we are getting frustrated or anxious might help with our interaction in the same way it would between two humans.

Augmented reality is an area in which Tim Cook has expressed interest and excitement. Aside from gaming which, of course, is a big part of what iPhones are used for, there are commercial experiences that could benefit from an augmented reality, mixed reality, merged reality or whatever else you want to call this blend of real and digital worlds.

Enterprise is becoming more and more important for Apple and security plays a big role in selling devices to enterprise. iPhones and iPads continue to penetrate organizations, becoming more of a target for hackers. Apple needs to stay ahead of the game. While consumers might not always recognize how important security is, Apple has been very passionate about security for quite some time. As we use our devices, not just to store pictures and contacts info but payment information, health information, smart home connections, we want our devices, as well as our data, to not to be accessible to people with bad intentions.

In education, the battle to displace Chromebooks in K-12 will intensify in 2017, with Microsoft eyeing that segment as a growth opportunity for Windows. For Apple not to have iPads forced to compete on price alone but in adding value to their offering beyond devices is important. Looking at applications and tools to educate as well as manage students is certainly a way to do that.

My Wish List for 2017

Considering the areas I have discussed above, there are a few things I would like to see Apple focusing on in 2017.

A More Conversational Siri – I have mentioned before how my relationship with Siri has been improving over time. This is good and bad at the same time. Good because I appreciate it. Bad because I want more. As my dependence on Siri grows, first in my car and then everywhere through my AirPods, I want Siri to rely less on my iPhone screen and become more conversational. Apple understands that less time looking at my screen does not mean I will think any less of my iPhone but I realize that, for conversational AI, the progress will be slow.

More Tools for Education – Swift Playgrounds was a great example of how Apple could do more to future proof our kids with the kind of skills they will need when they grow up. AI is here to stay and, instead of worrying about the threat of job losses, we should be investing in preparing the next generation with the set of skills required to get a job. While this is a much bigger issue than any single company could solve, I think Apple is in a good place to get kids engaged at an early age, not just with coding and problem-solving skills, but also with fostering creativity, imagination, and innovation.

Better Collaboration Tools – Collaboration is broader than just working with someone else. While I would like to see Apple focus on better collaboration tools for work, it is at home I more urgently need help. If you have kids, you know running a home is as complex as running a company. School and after-school activities, and work all blend together to create a scheduling nightmare only resolved with great collaboration skills.

More than any other company, Apple owns households and I would like to see more apps and tools to help households come together; not just for scheduling but also for monitoring and sharing. Without wanting Apple to give me whatever the digital equivalent of my daughter’s journal key is, I want to make sure my daughter is safe when she is online. Of course, teaching her how to do so is the first thing but there are more steps Apple could take to provide increased safety without hindering the experience. I am hoping machine learning will help with creating a more proactive approach to online safety as whitelisting websites, which is currently what most solutions boil down to, does not make for a rich experience. Sharing not just content but access to our smart homes across devices and family members could also be improved. Helping make our home life easier will pay dividends, especially at a time when the fight to own our home is intensifying among digital assistants. While having an assistant that connects with many smart home devices is valuable, having one that does not let me forget to pick up my kid from karate is priceless.

The Devil Is in The Detail

As you can see, my list is not about iPhone features and sexy new technologies. It is about practical experiences that improve my everyday life, something Apple has done for a long time. Something, however, that is hard to see when you first buy a product and something that is hard to market at point of sale. The challenge for Apple will be to continue to stay focus on delivering better experiences, rather than getting distracted by proving they can innovate by delivering sexy gadgets.

Many tech news publications do “year in review” and preview pieces at this time of year. One of the questions I always get asked is what new hardware products Apple might launch in the coming year. Some things – notably the iPhone – are so predictable in their annual schedule at this point they’re barely worth commenting on, while others like the iPad and Apple Watch seem to be settling into something of a pattern too. The most interesting question is often what completely new products Apple might release. With that in mind, here are some thoughts about the new products I think we might see from Apple over not just the next year but the next couple of years.

Additional wearables

I love my Apple Watch – I’ve used one version or another all day, every day, since it first came out. It’s made a meaningful difference in my ability to manage incoming notifications, my health, and my general information consumption. Over the past week, I’ve also been using AirPods a lot and those too are, for the most part, great little devices. However, there are some limitations to both of these products which make me think we might see additional wearables from Apple.

One of the biggest limitations of the Apple Watch now that it’s usable in the pool and has GPS functionality, it’s not appropriate to be worn during certain sporting activities. If you play basketball, soccer, football, lacrosse, or any other contact sport, wearing a watch (of any kind) would be either unwise or dangerous for the watch and player safety. If you get a lot of your exercise through these sports, the calories you burn and time spent exercising can’t be captured by the Watch and, therefore, simply go unrecognized by the Activity app. In the past, I’ve used Fitbit devices which I could slip into a pocket while playing and would track such activity for me. So one obvious device for Apple to launch is a companion of sorts to the Watch which would clip onto clothing or slide into a pocket in order to track such activity, syncing with the Apple Watch when you put it back on.

Others might prefer to have just one of these devices instead of a Watch, if they have never worn a watch of any kind – whether or not someone has traditionally worn a watch seems to be one of the biggest predictors of how they respond to the Apple Watch, in my experience. Some other device worn on the body to track activity and potentially buzz for notifications might be an interesting alternative. If it also came with audio controls as a companion to AirPods, that would make it particularly interesting – I’m finding that using Siri to control playback isn’t always the best fit.

Siri speakers

In my experience, the biggest advantage home speakers like Amazon’s Echo or Google’s Home have over Siri on any of the devices where it’s available isn’t functionality of the assistant itself but the size and configuration of the devices on which it operates. Those devices were, without exception, designed first and foremost with something other than microphone performance in mind. They’re mostly intended to be as small as possible, with smooth lines, large displays, and other features which hampers the ability to deliver high-performing far-field voice recognition. As such, if Apple really wants to improve Siri performance, especially in the home, the solution probably isn’t in software but in hardware and that’s where a Siri speaker comes in.

The next question is exactly what such a speaker would involve. Echo and Home are both very similar speakers, but they’re standalone – other than the mobile app used to set them up, they connect to WiFi in the home and operate independently. Google Home does work with Google Cast but, other than that, it is essentially disconnected from any other device in the home. It feels like an Apple home speaker would be more integrated into the ecosystem of devices in the home, becoming one of several outputs for audio, for example, and potentially working together with the Apple TV and/or other devices for whole-home audio. One can also imagine using Siri on phones to trigger music playing on the speaker, for example. Or even using the Siri speaker to trigger playing a TV show on the Apple TV for a child in the other room. I can also imagine using several of these speakers independently to recreate a sort of Sonos whole-home audio system.

HomeKit hardware

Another interesting category is first-party HomeKit hardware. To be honest, I think this category was more likely a year ago, when HomeKit was still struggling to get off the ground, versus today’s much healthier ecosystem. But I still think it’s possible Apple might eventually introduce its own hardware to work as part of the HomeKit system, especially in categories where design and ease of use on third party devices is poor or in areas where the devices would make a meaningful contribution to other aspects of the Apple ecosystem. For example, sensors placed around the home could help trigger lighting and other home automation features through HomeKit.

Having said all this, I continue to believe the smart home space is essentially stuck at the early adopter phase when it comes to these one-off purchases as opposed to managed services. With that in mind, it’s harder to see how Apple could launch products in this category and have a really significant impact on the market unless it also provides some kind of installation and management support. That would obviously be a departure for Apple, whose premise for much of its hardware has always been it just works. But smart home gear is inherently different in nature from standalone hardware products because it needs to be integrated into the home. That means dealing with wiring and other potentially dangerous and intimidating challenges that don’t apply when it comes to phones or laptops.

Augmented reality

Tim Cook has made increasingly enthusiastic remarks about augmented reality over the last couple of years and it seems likely Apple has some kind of play in AR up its sleeve. However, the biggest question is whether it sees the iPhone or some other device as the center of these experiences. We’ve already seen some basic AR features as part of iPhone apps, from an early version of Yelp which superimposed locations of restaurants on a live view of the environment to the more sophisticated merging of the real and virtual worlds in the Pokemon Go app. With dual cameras and the ability to sense depth, the iPhone is certainly capable of more sophisticated augmented reality applications than ever before.

But there are still some categories of augmented reality where a head-mounted device of some kind can provide more advanced functionality and, critically, free your hands to interact with the environment. This could certainly be used for gaming but also be used for educational and other scenarios, too. Apple is reportedly working on at least some head-worn AR devices, though we don’t know yet whether any of these will make it to market. However, it feels like 2017 could well be the year where we see the first mass-market AR devices launch, testing the market for such devices and potentially laying the groundwork for an Apple entry later.

Timing

If I had to guess, I’d say the Siri speaker and additional wearables are the most likely entrants in 2017, while AR feels at least a year or two away. I’m still not 100% convinced Apple should be in the first party home automation hardware business at all. And of course, I’ve said nothing about cars, which seem less likely as a future hardware category today than they did this time last year and, at any rate, would be multiple years away. It’s entirely possible we won’t see a major new hardware product category from Apple at all in 2017 but I suspect we’ll see at least one at some point.

Prior to their going on sale, we had quite a bit of information about the AirPods and what they were capable of doing. We knew they would pair easily and that there were sensors built in that knew when you are wearing them and when you weren’t. But some things just have to be experienced to appreciate their magic and the AirPods are one of them.

First, you will never see a more seamless pairing experience than the first time you pair the AirPods. Open the case, press Connect, and they are instantly paired with all my iOS devices, including iPad and Apple Watch. As soon as you put one AirPod in your ear, subtle sound lets you know they are on and ready to be used.

Perhaps my favorite feature is when you take one AirPod out, the music automatically pauses. Put it back in and it resumes flawlessly. This is useful when someone is talking to you and you need an ear free to listen and respond. I have some context with this experience, having used the Plantronics BackBeats Pro 2 which offer a similar smart sensor that pauses your music when you take off the headphones. For whatever reason, I found taking one AirPod out much more convenient than lifting the entire headset off my head. Perhaps just preference, perhaps not. In either case, the seamlessness of this experience is fantastic.

Whenever you need to know the battery level of the AirPods or the charging case, simply open the case next to your iPhone and this screen instantly pops up. Apple is using some sort of close proximity solution because, if you move the case even one foot away and open it, nothing happens on the phone.

I’ve been using Bluetooth headphones for years, so the awesomeness that is wireless headphones was not new to me. But, these were the first I’d used which are independently wireless — not connected to anything. With sports Bluetooth headphones you notice and feel the wire on the back of your neck as you move. Similarly, with over the hear wireless headphones like the Bose QuietComfort or Beats Wireless or similar ones, you feel the band that goes over the top of your head. The point is, they don’t disappear. I was surprised and delighted by how comfortable the AirPods are in my ears and how easily you forget they are there. Interestingly, I feel the same way about my Apple Watch. It seems the theme with both of Apple’s wearable computers (and yes I consider the AirPods to be wearable computers) is comfort to the degree of making them feel as though they disappear. This may be ear-shape dependent so my statement may not be true of everyone but it is with me.

Many others who have tried them have commented on how well they stay in your ears. I found this to be true. I used them while doing light exercises like yoga and even some living room cardio (via the Apple TV app Zova) and they stayed in perfectly. The lack of a cable makes a difference in helping them stay in your ears. I took it one step further and played a singles tennis match with my playing partner. I’m sure Apple wouldn’t recommend them for an intense run or similar activity, but I figured I’d try it. I’ve tried every form of sport Bluetooth headphones and, because of the wire behind my neck and some of the violent movements of tennis, they all fall out regularly. Here again, not having the wires attached made all the difference in the world. Maybe the AirPod shape fits my ears like a glove but they didn’t fall out one time during my match. In case it matters, I’m a fairly high level (by USTA ranking) tennis player, so I go at it pretty hard.

When I was tweeting my thoughts about AirPods, I got resistance from some saying, “Aren’t they just wireless headphones?” Apple’s AirPods are just wireless headphones about as much as the Apple Watch is “just” a watch and iPhone is “just” a phone. Nothing makes this more apparent than the Siri experience.

Siri in Your Ear
It is remarkable how much better Apple’s Siri experience is with AirPods. In part because the microphones are much closer to your mouth and, therefore, Siri can more clearly hear and understand you. I’m not sure how many people realize how many Siri failures have to do the distance you are from your iPhone or iPad, as well as ambient background noise and the device’s ability to clearly hear you. Thanks to the beam forming mics and some bone conduction technology, Siri with the AirPods is about as accurate a Siri experience I’ve had. In fact, in the five days I’ve been using the AirPods extensively, I have yet to have Siri not understand my request. Going further, the noise canceling built into the AirPods is impressive as well. I’ve intentionally created noisy environments to test the AirPods and Siri to see how it handles loud situations. Perhaps the most intense was when I turned my home theater system to nearly its peak volume, blasted Metallica and activated Siri. Remarkably, it caught every word and processed my request.

Furthermore, having Siri right in your ear and available with just a double tap on the side of either AirPod profoundly changes the experience. In many ways, the AirPods deliver on the voice-first interface in the ways I’ve been impressed with Amazon’s Alexa.

There is something to not having to look at a screen to interact with a computer, especially in a totally hands-free fashion. The AirPods bring about an experience which feels like Siri has been set free from the iPhone. This was Something that enhanced the experience but also pointed out some holes I hope Apple addresses.

Voice-First vs. Voice-Only Interfaces
There is, however, an important distinction to be made where I believe the Amazon Echo shows us a bit more of the voice-only interface and where I’d like to see Apple take Siri when it is embedded in devices without a screen, like the AirPods. You very quickly realize, the more you use Siri with the AirPods, how much the experience today assumes you have a screen in front of you. For example, if I use the AirPods to activate Siri and say, “What’s the latest news?” Siri will fetch the news then say, “Here is some news — take a look.” The experience assumes I want to use my screen (or it at least assumes I have a screen near me to look at) to read the news. Whereas, the Amazon Echo and Google Home just start reading the latest news headlines and tidbits. Similarly, when I activate Siri on the AirPods and say, “Play Christmas music”, the query processes and then plays. Where with the Echo, the same request yields Alexa to say, “OK, playing Christmas music from top 50 Christmas songs.” When you aren’t looking at a screen, the feedback is important. If I was to ask that same request while I was looking at my iPhone, you realize, as Siri processes the request, it says, “OK” on the screen but not in my ear. In voice-only interfaces, we need and want feedback that the request is happening or has been acknowledged.

Again, having Siri in your ear and the ability to have a relatively hands-free and screen-free experience broke down when you asked Siri something which required unlocking your phone. For example, one of the most common Siri actions of mine is to use Siri to locate a family member. Particularly my daughter who takes a bus home from school that has a variable drop off time due to traffic or student tardiness. Nearly every day I ask Siri to locate my daughter. But, when I do so via the AirPods and my phone has been off long enough to lock, it says I need to unlock my iPhone first. I hit this wall due to Apple’s security protocols, which I appreciate greatly. I wonder if, in the future, we can have a biosensor in the AirPods which authenticates with me and thus gives me security clearance to process a secure request like reading email, checking on a family member or other sensitive requests, without having to unlock the phone first.

There were cases where Siri assumes I can look at my iPhone to deliver the request. There are certainly plenty of queries where Siri, in a voice-only experience, works — when you ask Siri to read your new emails, or set timers, appointments, ask what time a sports game is, etc., but the sweet spot here will be when you can thoroughly use Siri and not need any screen for the full experience. I’m confident Apple will increasingly go in this direction.

Creating the Siri experience to be more than just voice-first but voice-only will be an important exercise. I strongly believe that, when voice exists on a computer with a screen, it will never be the primary interaction input with that screen. Take the screen away and things start to get really interesting. This is when new behaviors and new interactions with computers take place and it’s what happens when you start to integrate the Amazon Echo or Google Home into your life as both are voice-first experiences.

Looking Ahead
There is a great deal to like about the AirPods. Those who buy them and use them will be pleasantly surprised and delighted by their performance as wireless headphones and impressed with the upside of Siri in your ear. I consider the AirPods an important new product in Apple’s lineup and in the same category as the Apple Watch regarding importance for the future. Here is a significant observation of both the Apple Watch and the AirPods worth pointing out. Apple has a tendency to push engineering limits at times to learn or perfect a technique they believe is important for the future or to learn from it in order to integrate into other products. While iPads and iPhones are getting larger, the Apple Watch and AirPods are pushing the limits of miniaturization. Something that is key when we start thinking about future wearables where companies will pack tremendous amounts of technology into extremely small objects. The exercise of packing sensors, microprocessors, batteries, and more into extremely small objects and manufacturing them at scale is an incredibly important skill set to develop for the future. Both the Apple Watch and AirPods are key engineering milestones to build on for where I believe Apple is headed in the future.

The Big Upgrade
Arguably, the new MacBook Pros are a noticeable boost for those who need to upgrade their Mac. My MacBook Pro is a 2012 and, while it works fine for most tasks, was starting to show its age in many ways. I’ve been using the new 15” MacBook Pro with the Touch Bar. When I first saw the screen, I felt like it was larger than my older 15” MacBook Pro — in part, due to the screen resolution but also the slightly smaller bezels on the left, right, and bottom. The new MacBook Pros are also noticeably thinner and more compact than the previous designs. The battery life, even for a pro machine, is similar to that of the MacBook Air even iPad Pro for continual use, both which get a solid full day 8+ hours of working computing time on a single charge. Lastly, the keyboard is one of my favorite features. I’m picky when it comes to typing because I am a touch typist. I write more than 5,000 words a week and how the keyboard feels is crucial to me. To be honest, I did not like the keyboard on the original MacBooks but the second generation butterfly mechanism is dramatically improved in my opinion, and I love not just the feel but the sound.

The Touch Bar
Let’s talk about the Touch Bar. Without question, the Touch Bar is an enormous feature upgrade from physical function keys. What was once a static and fixed 13 button function key space has become an infinite set of dynamic possibilities once the row of keys is displaced by a strip of glass and clever software. After just a few minutes of using it, you quickly wonder why this had not been done ages ago.

That being said, there is a learning curve. The Touch Bar represents a dynamic shift in workflow. You have to begin the journey of discovery to understand all that it can do. This learning curve is short but, since the Touch Bar is capable of so much, I found myself experimenting quickly with all it could do to understand how to use it to enhance my work.

One of the things that stood out quickly was how many actions the Touch Bar could absorb that usually required more work or Track Pad swipes. In fact, there are many times where you can see an application smartly take advantage of the Touch Bar and dramatically limit, if not eliminate, the need to use the Track Pad for many tasks. The power of the Touch Bar is in its ability to contextually understand what you are doing, or the app you are in and offer up the most common buttons or menu items. For example, while writing this post, common text formatting options are right above my fingers, instead of off to the side or on top of the application window.

In this use case, formatting text still requires the Track Pad to select the text elements I want to format. But having the Touch Bar display the likely formatting actions is faster and more efficient — tap, select the text, then move the mouse over to the menu to the right or top of the screen to select my formatting option. I know this seems like a simple use case, but the efficiency of doing it this way is quite an improvement in workflow. This is particularly true in areas where options may be several layers deep in a menu. Actions like these highlight how much efficiency the Touch Bar adds to workflows when the software, or the user, customizes it to take advantage of the dynamic capabilities it offers.

After the experimentation stage where you spend time trying out and learning all the things it can do, there comes the new habits or new workflow phase. I’ve already found some use cases where my default behavior is tapping the Touch Bar for actions vs. using the Track Pad. A simple example of this is with Safari. I now use the Touch Bar exclusively to switch or open tabs, search the web, etc. Again, this seems simple, and it is but, regarding speed and efficiency related to the action you want to do, it is actually quite efficient.

Perhaps the best way to think about this, from a workflow perspective, is finger travel vs. mouse/trackpad travel. To accomplish some of the simple use cases I mentioned above — text formatting, selecting the text, scrolling over to the menu item on the top of the screen to select an option, scrolling to the menu on the right of the screen to further format — requires quite a bit of mouse travel up, down, left and right. The Touch Bar removes many use cases where the mouse has to travel distances on the screen and can be done with only slight travel of the fingers up to the Touch Bar. In all these experiences, the amount of time it takes to accomplish the task is less, thus making for more efficient workflows due to less travel of the hands or mouse.

Having used the iPad Pro as a primary computer for extensive lengths of time, as well as many Windows-based touchscreen PCs, the similar workflow benefits reveal themselves once you limit how much you need to use the mouse for scrolling or selecting. The speed to tap is often faster than the time it takes to move a cursor. The difference here, between a touch screen workflow and a Touch Bar workflow, is fundamentally limiting how far your fingers or hands need to go. This is why I believe Apple is holding to their philosophical viewpoint of not adding a touch screen to the Mac to limit the amount of travel that fingers, hands, or arms need to do to complete a task. Apple is focusing on keeping the action where the fingers are and limiting the amount of movement and time it requires to complete steps in your workflow.

To Touch Bar or Not
I started this piece saying the MacBook Pros are a big upgrade in many ways over their older designs for the display, speed and performance gains, more compact industrial design, and all the added perks and features a new machine brings. According to our internal Creative Strategies research, approximately 19% of Mac owners have a Mac that is five years old or older. This compares to roughly 21% of consumers with Windows PCs 5 years or older. There are undoubtedly many people in need of an upgrade and, for them, the new MacBooks are a solid one to consider. The question remains whether those folks spend the extra money to get a Touch Bar or non-Touch Bar version of the new MacBook Pros. Given the incremental price difference, I imagine this question is top of mind. Here is how I’d think about it.

From my experience, the Touch Bar adds significant value regarding efficiency and workflow, given how dynamic and predictive it can be. But, to truly make a case for this feature, you have to be willing to bet on Apple’s third party software development community optimizing their Mac-based apps, or creating new ones, to benefit from this feature. If you are willing to bet Mac software developers will take advantage of the Touch Bar, then I wouldn’t hesitate on spending the extra money. There are so many unique opportunities for software developers to make it faster and easier for their customers to get work done by integrating the Touch Bar into their software. I’ve already experienced this with Apple’s first-party software, and I’m excited to see what third parties do with the Touch Bar. It’s one of those features that, once you start using it, you want to use it with all your Mac software — but we just aren’t there yet. Many developers, like Microsoft and Adobe and others, have already committed to releasing updates which take advantage of the Touch Bar so clearly there will be apps beyond Apple’s. This is an experience that will only get better as software developers step up to the opportunity and create new experiences.

It will be interesting to see how Apple moves the Touch Bar forward as well. Given the predictive and on device machine learning features Apple integrates into iOS, so the software adapts and conforms to your unique needs, it is possible they apply this same approach to the Touch Bar. Perhaps, over time, macOS can learn my core behaviors and most common tasks and workflows and begin to have the Touch Bar adapt and become even more predictive and proactive in offering me the kind of software buttons or menu items I need in the context of my work. Right now, the developer is in control of applying the right contextual buttons to the Touch Bar, or the user does it through full customization. It will be interesting, in the future, if a form of artificial intelligence can play a larger role in showing me Touch Bar options when I need them based on my unique workflows.

Touch Bar vs. Touch Screen
Inevitably, any element of this discussion will shift to the difference in philosophy between Microsoft with Windows and touchscreen-based notebooks and desktops and Apple’s philosophy with touch-screen tablet computers and Touch Bar-based notebooks. Ultimately, in my opinion, the fact there are so many options is what matters and what is exciting. These companies are showcasing their best attempts to help you get more out of your computer and do your job more efficiently and more productively. What consumers need to decide is which style is best for them and their workflow.

In both the case of the Touch Bar and touch screen PCs, what matters is not the philosophical differences but what software developers do to leverage the unique hardware that will be on the market from Apple and Microsoft’s partners. A lot of jobs exist in the world that need something more than a smartphone or a tablet and, for those folks, they have more choices than ever to help them get their job done.

Apple this week started selling refurbished iPhones in the United States through Apple.com. Of course, wireless customers have long had the opportunity to buy used iPhones (and other brands) from their carriers and other retailers and online sellers. However, the fact Apple is now offering the devices direct (along with long-available refurbished products such as Macs, iPads, and iPods) is notable. It reflects both the maturing nature of the market and Apple’s desire to put the iPhone into the hands of more budget-constrained smartphone buyers while still making enviable margins.

The Collapse of Subsidy Models

Just a few years ago, the U.S. smartphone market was almost entirely subsidy driven, which meant few people actually knew how much a smartphone cost. What they knew was, roughly every two years, they could pay $200 to their carrier and get a new smartphone. When U.S. carriers began to move away from the subsidy model, many people were shocked to realize that they were paying upwards of $600 or $700 over the lifetime of that phone. As that realization took hold, the market began to bring forward a long list of new financing options.

Today, buying a smartphone is a lot like buying a car. If you’ve got the cash, you can pay for the whole thing upfront or you can pay through an installment plan (essentially a loan) or you can sign up for something very akin to a car lease in which you pay a monthly fee and get a new phone roughly every year. All of the plans effectively shift the cost of buying a new phone around but none really help lower the cost. That’s why the refurbished market is important. While there are fewer options when purchasing a refurbished phone (you typically pay all up front), the savings can be substantial.

Certified Pre-Owned Luxury Phones

Back in September 2015, Apple launched its own iPhone Upgrade Plan along with its iPhone 6S lineup, directly competing with its carrier partners. Apple customers could pay a monthly fee (starting at $32 per month) and then, one year later, swap that iPhone for the next one. The iPhones Apple is now selling online are likely among the first batch of phones it collected through that program.

Companies such as Gazelle have long bought people’s old smartphones but, in the early days, those phones were typically several years old, which meant companies often shipped them to emerging markets where they were either resold or scrapped for parts. One-year-old phones, on the other hand, still retain a great deal of their value, which is why Apple got into the game itself. In fact, based on IDC’s estimates, Apple is adding significant additional dollars of per-device profit for every phone it first ships out as part of the upgrade program and then reclaims and resells a year later. All the while, it’s also increasing the number of iOS users and bolstering services revenues as a result.

So, for example, right now you can buy a 16GB iPhone 6S for $449, $100 less than the same new model on BestBuy.com (Apple cleverly doesn’t offer a new version of the 6S on its site with the same memory configuration, but a 32GB version of the 6S runs $649 on Apple.com). Similarly, a refurbished 64GB 6S Plus sells for $589, which is $750 new on BestBuy.com.

The result: A buyer who is interested in buying an iPhone now has a wider range of options available to them. The entry-level price for what was Apple’s top-of-the-line phone a little more than a year ago now starts at $449 instead of at $549. Not exactly cheap, but certainly more attainable for somebody who is able to pay the entire cost up front. At some point, I would expect Apple to start selling refurbished versions of the iPhone SE, which has a starting price of $399 new. We could expect prices in the $299 range or lower.

Most companies that sell refurbished phones closely inspect those phones before reselling, offering what amounts to a certified pre-owned checklist at a used car dealer. One of the advantages of buying refurbished from Apple, however, is they not only certifies the phones but they also install a brand new battery and outer shell. The new battery piece is huge, as that’s clearly one of the areas of most concern when buying a used device. And by including the new battery (which costs Apple very little), the company ensures the buyer has a good experience for the life of the product.

Who Buys Used?

Techies might not find the idea of buying a used device appealing (they’re likely the ones signing up for the annual refresh and creating the supply of one-year-old phones) but a growing percentage of regular consumers clearly see the value. In a recent IDC survey of US smartphone users, 26% said they were “somewhat likely” to buy a well-maintained 1-year old phone if the price were lower; another 14% said they were “highly likely” to do so. Among current iPhone owners specifically, those two percentages were 25% and 9%.

While there’s clearly a market for refurbished iPhones here in the US, the larger play for Apple long-term is its ability to move refurbished iPhones into markets outside of the US. For years, pundits have wondered when Apple would ship an inexpensive iPhone geared toward emerging markets. It seems increasingly clear Apple’s answer is to sell refurbished iPhones instead.

It’s a smart plan that will likely work quite well for Apple once it figures out two key issues: Which countries’ consumers are amenable to used products (not all are) and which countries’ regulations will allow refurbs to flow in (not all will). Once Apple sorts these issues out, I expect we will start to see Apple itself promoting refurbished products in more countries at more prices.

At IDC we’re now closely monitoring the used smartphone market as we firmly believe growth here could have a significant impact on shipments of new phones in the future. Apple won’t be immune to the potential negative impact of this secondary market. But, by creating its own virtuous cycle through its upgrade plans and refurbished offerings, it makes more money now and better controls its market position down the road.

There’s been lots of talk since Apple’s event last week about the reception to the new MacBook Pros, especially among the Apple commentariat. It’s fair to say the backlash against these new devices is stronger than for any MacBook announcement I can remember and yet it’s mostly coming from two particular sets of people – those who use heavy-duty creative applications such as Photoshop and those who develop for Apple platforms. This is easily Apple’s most vocal audience and so such a response must be at least a little disheartening. But it’s also worth remembering that Apple – and even the Mac in isolation – has long since gone mainstream and is bigger than these groups. Apple’s challenge now isn’t serving this hardcore base but pleasing the much larger mainstream Mac user base without alienating the power users.

Apple’s increasingly diverse base

I wrote a post a while back about the counterintuitive liability Apple has in its growing customer base. On the one hand, this customer base is a huge asset, especially given the upgrade cycles for devices like the iPhone and the ability to sell services to a captive group of users. But on the other hand, the increasing diversity of this base can also be a liability, because Apple now has to please many groups in a much less homogeneous base than in the past. The problem is the public image of Apple among many in the media and beyond continues to be of a company that serves mostly creative professionals. This perception has led to a lot of misguided commentary over the past week, both about the damage Microsoft’s Surface Studio could do to Apple’s Mac base and about the perceived shortcomings of the new MacBook Pro line.

Apple’s Mac base today

The reality is that Apple’s installed base of Macs today is likely around 90 million. That’s up enormously over the last fifteen years or so – it was around 25 million in the early 2000s. As that base has grown, it’s diversified considerably. Just visit any college campus to see row on row of MacBooks in lecture rooms and study halls. These aren’t creative professionals and they’re not even using their MacBooks for particularly resource-intensive tasks. But, of course, there are still creative professionals and Apple developers who use Macs for work. So it’s worth thinking about what percentage of the overall base these users might represent.

Here are some data points:

• In 2013, Adobe estimated it had an installed base of around 12.8 million users of its Creative Suite software, with another 250,000 on Creative Cloud. Around 40% of this revenue came from what Adobe described as creative professionals, with another 25% coming from other creative people in businesses, 10% from creative people using it at home, and 25% from education
• Adobe currently has around eight million Creative Cloud subscribers (this is how Adobe now sells its creative suite, including Photoshop, Illustrator, Premiere, and so on)
• At WWDC this year, Tim Cook announced Apple had 13 million registered developers

If we put these numbers together, we get a picture of 8-13 million users of Adobe’s creative products and another 13 million or so Apple developers. Of course, of those Adobe users, a good chunk will be using Windows versions rather than Mac versions. At the absolute outside, though, it gives, at most, around 25 million total users in the two buckets that have been most vocal about the MacBook Pro changes, out of a total base of around 90 million, or around 28%. Realistically, that number is probably quite a bit smaller, perhaps around 15-20% of the total. Of these, not all will share the concerns of those who have been so outspoken in the past week. To look at it another way, Apple sold 18.5 million Macs in the past year, which might end up being roughly the same as the combined number of creative professionals and developers in the base.

In the end, the picture that emerges is of a base of Macs with the kinds of users that have been expressing concerns or frustration with the changes in the minority. The vast majority of the user base is in other categories, principally general purpose consumer and business users. How does the rest of the base feel about the new MacBooks? Well, of course, that base is much less vocal and less visible – the general purpose Mac user tends not to blog or host podcasts about Apple. They’re much more likely to quietly keep using the products they have and occasionally upgrade to something new. The best place to look for their feedback is sales numbers for the Mac. Those have been down a little lately as the existing Macs have been getting a little long in the tooth and those in the know have been waiting for upgraded machines.

However, Phil Schiller said this week online orders for the new MacBooks were higher than they’ve ever been for a new product before, suggesting that some of this pent-up demand is being released now. Mainstream users – and likely quite a few from among the professional class of MacBook users too – are buying this new product despite the misgivings some power users have. We won’t know until at least three months from now – and probably longer – the actual numbers on how these MacBook Pros are selling. But my guess is those sales numbers will suggest the mainstream base cares a lot less about some of the subjects of the criticism from the past week and a lot more about a decent bunch of spec upgrades, thinner and lighter hardware, and some interesting new features.

Keeping the pro base happy

Of course, Apple can’t simply ignore the professional base – though these users may be a minority among the overall set of Mac customers, they are an important segment an,d as we’ve already seen, a vocal one. Pleasing them is important in its own right but also as a way to influence broader perceptions of the Mac and Apple as a company. Apple likely needs to do more here to mollify this base. For starters, it needs to update the desktop Macs, especially the Mac Pro, quickly. The current version of the Mac Pro suffers from being less upgradeable than its predecessor. With that being the case, it requires hardware refreshes more – not less – frequently. It might also be a reasonable concession to the complaints from this base to make it more upgradeable. I suspect Apple will have to think hard about how to please those who want a portable yet ultra-powerful machine, which is really the even narrower segment that’s been criticizing the new MacBooks. The portability/power tradeoff it’s made in the new machines seems to be fine for the mainstream, but that’s the one thing that seems to be creating the most problems for the hardcore base and that’s worth addressing.